Conveyancing and the chain transactions – a closer look
Buying or selling property in Scotland can be a complex process. From the legal intricacies to practical hurdles, several challenges can arise during property transactions. These are not always something over which your own solicitor has any control.
Most offers in Scotland now make use of the Scottish Standard Clauses – a set of pre-agreed contractual terms developed by the Scottish Conveyancers Forum and accepted by the profession as a whole. These terms cover the routine points that arise in almost every purchase/sale, and are designed to make the process quicker and clearer for both buyers and sellers alike.
Even though the clauses are standard, they can be and often are varied. The seller may accept your offer as it stands, but more often than not they’ll issue a qualified acceptance, agreeing in principle but with conditions. Common changes include adjusting the entry date or excluding moveable items together with any suspensive provisions built into an offer. Negotiation is done solicitor-to-solicitor based on clients instructions and continue in writing until both sides agree. The letters comprising the offer, qualified acceptance and any further changes are known as ‘missives’. Only once the missives are “concluded”, is there a binding and enforceable contract in place. At any point prior to this stage, either party can amend the terms of the contract or withdraw altogether without potential penalties. This is a point we emphasise to our clients at all times during the course of a transaction. Your solicitor will be striving to achieve concluding missives which gives both buyer and seller certainty, but you must be sure about your finances and the property before reaching this point. It is often this point that can cause a delay to missives whilst the purchasing party establishes everything is in place to allow them to proceed.
The Scottish system was originally designed to have missives concluded at an early stage with specific clauses allowing for withdrawal should the titles or various reports required contain something materially adverse to the potential purchasers use of the property. Also, it was often common practice to sell a property prior to offering for a property to buy. Purchasers had therefore already sold their own property before offering on a new one. The system was efficient and provided certainty to all concerned
Nowadays, it is more common to make an offer to purchase a property before selling your own. Solicitors are required to make it clear in any offer that the purchaser relies on the proceeds of a sale and a clause to that effect is included in the offer. Likewise, if 3rd party finance (a mortgage) is required then a clause to that effect is also included. These are known as suspensive clauses. Whilst these clauses are usually deleted in the qualified acceptance issued by the sellers solicitor, the purchasers solicitor cannot accept those deletions until their clients are satisfied that everything is in place. Property transactions are very often part of a chain, where multiple buyers and sellers are involved, all offering before they have sold and all dealing with the same suspensive conditions. Chain transactions increase the complexity and the risk of delays. This can result in missives being concluded much later in the transaction and this also makes agreement on a fixed date of entry particularly challenging. It is not uncommon for missives to be concluded on the date of entry, again a point that we emphasise to our clients at the outset as this can prove itself to be a logistical minefield for parties trying to facilitate a same day move from one property to another. The selling solicitor cannot conclude missives until the purchasing solicitor agrees to the removal of suspensive clauses. The timing of this is dependent on progress further down the chain. The essence of missives is a bi-lateral agreement and as with any contract, requires a consensus between the parties. Only once all parties have reached agreement can missives then be concluded.
To navigate this challenge it is prudent to have contingency plans in place which can help mitigate the impact of any unexpected delays in the chain. It should be borne in mind that until missives are concluded, it is always open to either party to walk away from the purchase or sale and a date is not fixed until the bargain is concluded. If there is no binding contract in place then there is no penalty provision penalising a change of heart nor is there any obligation on the other party to re-imburse you for out of pocket expenses, a situation which is stressful for all involved hence our practice to advise clients of these pitfalls and manage expectation.
In conclusion it is often a stressful time moving home and in our opinion the system is currently not lending itself to making that process less stressful, quite the opposite. It is important to be aware of the potential for delay, it is important to safeguard your position with external third parties such as removal companies and the like and also be certain on possible outcomes. We find the chain transaction has placed a massive obstacle to streamlined conveyancing but sadly, it appears to be the norm for the time being and we must navigate our way through this solicitor and client alike with open and honest dialogue the key to all parties being full prepared for what may arise.
For more information, contact our experienced Residential Conveyancing Team on 01324 622 888 or email help@randa-fa.co.uk.
